Do you know about the Future Scholar 529 plan? As a new parent, I didn’t know much of anything about babies. I was just trying to do the best I could for my newborn baby, taking care of basic needs like food, shelter, and lots of cuddling. Baby books are great at covering the basics but what they lack, I think, is the financial aspect of planning for your child’s educational future in the form of a 529 college savings account. This is one of the things I did plan for and probably the only thing I can say for certain I knew enough about to do. South Carolina has a pretty amazing 529 plan called Future Scholar and having researched most state plans myself for my own kids, this is one of the very best.
5-2-9. Wait. What?
If you’re reading this and have no idea what I’m talking about, that’s ok. It’s not like this is covered in all the “what to expect when you’re expecting” books. A 529 plan is an investment account specifically for saving money for college. Money put into it is tax deductible on state income taxes (meaning you’ll save money on your taxes when you contribute) and any interest it earns over the life of the plan is tax-free (meaning you won’t pay taxes on what you earn) as long as you use the money for approved expenses, like college tuition.
Every state has a 529 plan, but they all differ slightly in how they are managed and the benefits they carry. South Carolina’s plan, called Future Scholar, has been recognized as one of the best nation-wide for its low fees and its tax advantages, which are the best available for South Carolinians.
Thank you to Future Scholars for sponsoring this article on Kidding Around.
Do I really need a 529?
The short answer is, yes, you need a 529 for your kid. Unless you are independently wealthy or your child has a benefactor willing to pay for the huge expense of college, a 529 is an excellent choice.
College is ridiculously expensive and literally anything you put away now will be better than having nothing later. Latest data shows that the average in-state cost per year is $20,770 and for private, $46,950. That’s a lot of money, and it’s only going to increase.
Future Scholar has handy, yet sobering, calculators to determine how much money you’ll need to put away into your child’s 529 account per month to pay for college versus how much money it will cost you to borrow the entirety of your child’s college education in a loan. Spoiler alert: using a 529 is far less expensive than trying to take out a loan to cover the entire cost of college.
You’re able to use the money in your 529 for two and four year public and private colleges as well as certain vocational schools. Learn more in question four you’ll find on this page.
You can feel like a hero parent. It’s easy!
When I got pregnant, I knew I wanted to open a 529 immediately after my daughter was born but I also knew I wasn’t going to be able to put a ton of money away, which is why I wanted to open it right after her birth. It was super easy and took hardly any time and honestly, I felt like a great parent. In the midst of birthing and raising kids, I’ll take any points I can get.
With Future Scholar, all you’ll need is your personal information plus the beneficiary’s information (your child’s personal information) plus a way to contribute money to the account either by direct deposit or check. Once you have all of that, you’ll choose the right investment plan for your account. You can enroll online or through the mail.
With my 529 accounts, I was able to easily set up direct deposit every month so I didn’t need to think about it. It works well and is one less thing I need to remember.
Building up the funds for college
The word “investment” can sound scary. It was (and still is sometimes) to me. But Future Scholar offers several different levels of investing so you can feel comfortable with the risk you want to take and happy about the possible reward of more money in the account when it comes time for college. After all, this is how you’ll be able to save, making that money work for you, all the years you are changing your kid’s diapers, shuttling them to baseball, and helping them fill out those college applications.
Investments are usually a long-term goal and while you can certainly open a 529 at any time during your child’s life, it’s a better financial decision to do it sooner rather than later. Again, the numbers on the cost of college, the rate of inflation, and the vast amount of money it will cost to obtain a college degree are daunting to say the least. But again, any amount of money in a 529 account is a great way to pay for even a small part of your child’s college education.
And anyone can contribute to your child’s 529 account. So, for example, if you have no room (or patience) for toys in your house and the grandparents want to give a birthday gift, they could donate money to their grandchild’s 529, which can be used for future education.
Transferring funds + Non-traditional ways to use 529s
If your child ends up not going to college, funds saved up in the Future Scholar 529 are still yours, and you can use the account for other qualified educational expenses for your child, including possible expenses related to enrollment at a technical college and some trade schools. Money saved in a 529 for a child not attending college could be transferred to another child as well.
Additionally, if over the course of 18 years, your child decides that the traditional route isn’t right for them, they’ve got options: two-year schools, technical schools, graduate programs, and med school.
Ready to start? It’s never too late!
If you’re reading this as a parent of an elementary-aged child or even a freshman in high school and feel like you’ve missed the 529 boat, you haven’t. You can still open a Future Scholar 529 account and squirrel away some money for their college education.
And if you’re pregnant or have a new baby and want to start thinking ahead to your child’s future, opening a Future Scholar 529 is an excellent choice. Enrollment is easy and can be done right here.